ENVIRONMENTAL REGULATION: WHOSE SELF-INTERESTS ARE BEING PROTECTED?

Authors

B. PETER PASHIGIAN

*Graduate School of Business, University of Chicago. This research was supported by the Center for the Study of the Economy and the State, University of Chicago, the Graduate School of Business, University of Chicago, and the National Science Foundation, Regulation and Policy Analysis, NSF SES 8308909. I would like to thank Rodney Smith for a careful and detailed review of the manuscript and for the many suggested improvements in content, style and organization of the paper. I have also received helpful comments from participants of seminars at the University of Chicago, Center for the Study of Business Regulation, Duke University, University of Florida, Center for the Study of American Business, Washington University, Rochester University and Stanford University. Andrew Weiss and Alan Frankel served as able research assistants.

Abstract

Special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards. Locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions. Analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the South and the West. Pollution abatement costs per unit of output are higher in areas with higher not lower air quality.